Life and Health 2
In addition to participation requirements, how does an insurer guard against adverse selection when underwriting group health? A By requiring that the insurance be incidental to the group B By having each enrollee undergo a paramedical examination C By obtaining MIB reports on each enrollee D By imposing case management provisions
A
Which of the following statements concerning the Medical Information Bureau is correct? A The Medical Information Bureau assists underwriters in evaluating and classifying risks. B The Medical Information Bureau report must be attached to each life insurance policy issued. C All applicants for life insurance receive a copy of the findings of the life insurance medical examination. D Information contained in the Medical Information Bureau report is available to all physicians.
A
In a life insurance application, all of the following signatures will be required EXCEPT A The agent. B The home office underwriter. C The insured. D The owner (if different from the insured).
B
According to the Fair Credit Reporting Act, all of the following statements are true EXCEPT A It ensures that consumer reporting agencies are fair in their treatment of consumers. B Investigative consumer reports can be used to obtain information on the applicant's character and reputation. C If an applicant is declined for an insurance policy, he or she has no right to know what was in the report. D It protects consumers against the circulation of inaccurate information.
C
All of the following are true about Group Life insurance EXCEPT A Evidence of insurability is usually not required. B The employee is the insured. C The employer is the beneficiary. D It is usually written as annual renewable term insurance.
C
An adjustable life policy can assume the form of A Only term insurance. B Only permanent insurance. C Either term insurance or permanent insurance. D Neither term insurance nor permanent insurance.
C
All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT A It is funded by a level premium. B It builds cash value. C If the insured lives to age 100, the policy matures, and the face amount is paid to the insured. D It does not have a guaranteed death benefit.
D
In a noncontributory group policy A 75% of all employees must elect to join the plan. B 100% of employees must be allowed to participate. C 75% of eligible employees must elect to join the plan. D 100% of eligible employees must participate.
D
The policyowner has an option to pledge the life insurance policy as collateral for a bank loan. This is called A An insurance pledge. B A unilateral agreement. C An absolute assignment. D A collateral assignment.
D
What does an annuity protect the annuitant against? A Leaving beneficiaries without income B Estate taxes C The financial impact caused by premature death D Living longer than expected
D
What is the maximum age that a disabled insured worker may receive Social Security disability benefits? A For life with no maximum age limit B 54 C 62 D 65
D
A Major Medical Expense policy would exclude coverage for all of the follow treatments EXCEPT A Drug addiction. B Eye refractions. C Dental care. D Cosmetic surgery.
a
All of the following are characteristics of group health insurance plans EXCEPT A The parties that hold a group health insurance contract are the employees and the employer. B The cost of insuring an individual is less than what would be charged for comparable benefits under an individual plan. C Employers may require the employees to contribute to the premium payments. D The benefits under a group plan are more extensive than those under individual plans.
a
An agreement that is enforceable by law is known as what kind of contract? A Legal B Conditional C Adhesion D Unilateral
a
An employee is covered under COBRA. His previous premium payment was $100 per month. His employer now collects $102 each month. Why does the employer collect an extra $2? A To cover the employer's administration costs B Penalty for termination C Premiums go up every year regardless of health conditions D To cover other employees who qualify to bypass premium payment
a
An insured purchased a health insurance policy with a renewability clause that states the policy is "Guaranteed Renewable." This means that as long as the required premiums are paid, the policy will continue until the insured A Reaches age 65. B Dies. C Reaches age 100. D Becomes disabled.
a
Cash Value guarantees in a whole life policy are called A Nonforfeiture values. B Living Benefits. C Cash Loans. D Dividends.
a
How long is the grace period for an individual life insurance policy? A 1 month B 2 weeks C 7 to 10 business days D 3 months
a
Medicare is a health insurance program for all the following individuals EXCEPT A Those with low income and low assets. B Those 65 or over. C Those with permanent kidney failure. D Those who have been on Social Security Disability for 2 years.
a
Policy delivery refers to the delivery of the A Completed insurance policy to the policyowner. B Completed application for the insurance policy to the general agent. C First premium and receipt for the insurance policy to the agency. D Insurance policy cost disclosure materials to the applicant.
a
When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as A Estate conservation. B Estate creation. C Liquidity. D Life settlement.
a
Which of the following best describes the type of care provided by HMOs? A Preventive B Elective C Major medical D Fee-for-service
a
Which of the following statements regarding HIV testing is NOT true? A Test results must be sent to the Department of Insurance. B Testing may be waived at the discretion of the insurer. C The insurer is responsible for the cost of HIV testing. D Written consent from the applicant is required prior to the examination.
a
Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity? A Accumulation period B Premium building period C Annuity period D Loading period
a
Who is obligated to make sure all questions are answered and all necessary signatures are collected on the application? A The agent B The applicant C The insurer D The issuer
a
A new homebuyer wants to purchase a life insurance policy that would protect his family against losing the home, should he die before the mortgage was paid. The most inexpensive type of policy that would accomplish this need would be A Level term. B Decreasing term. C Increasing term. D Flexible term.
b
According to the Time Limit on Certain Defenses provision, statements or misstatements made in the application at the time of issue cannot be used to deny a claim after the policy has been in force for a minimum of how many years? A 1 year B 2 years C 3 years D 5 years
b
The frequency and the amount of the premium payment are known as what? A Plan mode B Premium mode C Net premium D Level premium
b
What is the primary difference between Medigap and Medicare SELECT policies? A Medicare SELECT policies cover the first 3 pints of blood. B Medigap policies provide coverage for core benefits. C Medicare SELECT policies contain restricted network provisions. D Medigap policy premiums are lower.
c
Which federal act defines rules pertaining to protected health information? A ERISA B COBRA C HIPAA D ACA
c
Which of the following describes the relationship between the principal sum and a capital sum? A The capital sum varies, while the principal sum does not. B The principal sum is a percentage of a capital sum. C A capital sum is a percentage of the principal sum. D The principal sum varies, while the capital sum does not.
c
Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs? A Applicants wishing to pay off a mortgage should they suffer a premature death might buy a decreasing term plan. B Employers looking to provide cost effective group life insurance for their employees may choose annual renewable term. C Applicants who may require a larger death benefit in the future should buy convertible term insurance. D Applicants concerned with the increasing cost of living should purchase increasing term.
c
Whose responsibility is it to ensure that the application for health insurance is complete and accurate? A The underwriter's B The applicant's C The agent's D The policyowner's
c
A husband and wife both incur expenses that are attributed to a single major medical insurance deductible. Which type of deductible do they have in their policy? A Flat B Annual C Per occurrence D Family
d
All of the following are features of catastrophic plans EXCEPT A Out-of-pocket costs. B High deductibles C Essential benefits. D High premiums.
d
An individual receives a lump-sum inheritance. He'd like to use the money to create a lifetime income since he'll be retiring soon. He purchases an annuity and wishes to receive payments beginning in 2 months. What did he buy? A Flexible Premium Deferred Annuity B Flexible Premium Immediate Annuity C Single Premium Deferred Annuity D Single Premium Immediate Annuity
d
How many days' notice must an insurer provide to an insured regarding the lapse of a policy due to outstanding loans? A 7 days B 10 days C 15 days D 30 days
d
The provision that sets forth the basic agreement between the insurer and the insured and states the insurer's promise to pay the death benefit upon the insured's death is called the A Payment of claims. B Declarations. C Consideration. D Insuring clause.
d
Which of the following losses would likely be covered under the Accidental Death rider? A Suicide. B Mountain-climbing accident. C Death resulting from a long-term disability. D Death caused by a head-on collision.
d
Which of the following statements is NOT true regarding health insurance policy provisions? A All individual policies contain Universal Mandatory Provisions. B Insurers may only offer optional provisions that are allowed by the state where the policy is delivered. C Insurers may add provisions that are not in conflict with uniform standards. D All additional provisions written by insurers are cataloged by their respective states.
d
Which of the following types of care could be provided at a community center? A Respite care B Intermediate care C Skilled care D Adult day care
d
Which of the following would be likely to establish a SEP? (special enrollment period) A Military personnel B The elderly C Low-income individuals and families D Small employers
d A Simplified Employee Pension is a type of qualified plan suited for the small employer. SEP is an arrangement whereby an employee establishes and maintains an individual retirement account to which the employer contributes. Employer contributions are not included in the employee's gross income.
A limited health insurance policy that will pay a lump sum to an insured diagnosed with a heart attack, stroke, or renal failure is known as A Dread disease insurance. B Critical illness insurance. C Accidental death and dismemberment. D Hospital confinement indemnity.
b
All of the following are consideration in an insurance policy EXCEPT A The promise to pay covered losses. B The cash value in the policy. C The statements on the application. D The premium paid at the time of application.
b
An insured needs ongoing treatment for a diabetic condition. Under PPACA, which of the following is correct? A Treatment is subject to an annual dollar maximum. B The condition must be covered under the insured's plan. C The condition is covered if the insured's plan specifies the condition. D Treatment is subject to pre-existing conditions exclusion.
b
An underwriter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses? A Medical exam B Attending Physician's Statement C MIB Report D Policy application
b
Elaine's Basic Hospital Expense policy has a $500 per day limit for room and board in a hospital for a maximum of 5 days. Elaine got sick and had to spend 3 days in the hospital at $650 a day. How much will Elaine have to pay to cover the rest of her room and board charges? A $350 B $450 C $0 D $150
b
If a basic medical insurance plan's benefits are exhausted, what type of plan will then begin covering those losses? A Social security B Supplementary major medical C Supplementary basic medical D None. Once benefits are exhausted for a given benefit period, the insurer is responsible for covering the remainder of the expenses.
b
If the insurance premiums were not tax deductible, what other taxation will this affect? A Federal income tax B Taxation of benefits C Taxation of interest D Taxation of the policy's cash value
b
Joe, age 63, was disabled and can no longer work. He meets the Social Security definition of total disability. How many work credits must Joe have accumulated to have the status of fully insured? A 20 B 40 C 10 D 6
b
The benefits for group disability plans are based on A The number of employees of the company. B A percentage of the worker's income. C A flat amount. D The employer's net worth.
b
What is the cost of coverage based on for group life insurance? A The insureds' individual ages B The averabge age and the ratio of men to women C The average age D The ratio of men to women
b
Which of the following types of insurance policies would perform the function of cash accumulation? A Increasing term life B Whole life C Term life D Credit life
b
With Adjustable Life, the owner can change all of the following EXCEPT A The length of time the coverage will last. B The insured. C The death benefit. D The premium.
b
With respect to the entire contract clause in health policies, who has the authority to make changes to an existing policy? A Changes cannot be made on the policy. B Only an executive officer of the company C Solely the producer D Solely the policyowner
b
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select? A Life income B Joint and Survivor C Fixed-amount installments D Fixed-period installments
b
Insurance contracts are unilateral in nature. What does that mean? A All parties to the contract exchange something of value. B A promise is made only at the time of policy application. C Only one party makes a promise. D The insured must make a promise to pay the premium.
c
The owner of a deferred annuity pays $100 in premium one month, and $130 the next month. Which of the following terms best describes this premium payment arrangement? A Single premium B Level premium C Flexible premium D Lump-sum premium
c
Which of the following statements is INCORRECT concerning Modified Endowment Contracts (MECs)? A A primary purpose of the regulations governing MECs was to reduce incentives for the use of life insurance as a short-term investment vehicle. B A distribution from an MEC may be subject to a 10% penalty if withdrawn prior to 59½. C An MEC must always pass the 7-pay test. D A life insurance policy failing the 7-pay test is classified as an MEC.
c
Which statement best describes agreement as it relates to insurance contracts? A All parties must be capable of entering into a contract. B Each party must offer something of value. C One party accepts the exact terms of the other party's offer. D The intent of the contract must be legally acceptable to both parties.
c
In the event an annuitant dies during the accumulation period, and there is a beneficiary named in the annuity, annuity benefits would be paid to the A Named beneficiary. B Annuitant's estate. C Next of kin. D Insurance company.
A
Which of the following is NOT normally an excluded cause of disability in an individual disability income policy? A Complications from pregnancy B Injury resulting from illegal activity C Suicide D War
A
In order for a business partner to be eligible for a Keogh plan, he/she must work full-time and own at least how much of the business? A 33% B 50% C 10% D 25%
c
An applicant misstates his age on his application for a health insurance policy. He states that he is 39, but his actual age is 49. When he files a claim, what will most likely happen? A If the mistake was found after incontestability period, the benefit will be paid in full. B Benefits paid will be those that would have been purchased at the correct age. C Benefits will not be paid. D The policy will automatically be dropped.
B
Once the initial benefit limit in Medicare Part D is reached, how is the beneficiary affected? A Medicare Part A will cover all costs. B The beneficiary is then responsible for a portion of prescription drug costs. C The beneficiary is then responsible for 75% of prescription drug costs. D The beneficiary is no longer responsible for prescription drug costs.
B
The family term rider incorporates A Cost of living rider and family protection rider. B Spouse term and children's term. C Whole life and other-insured term. D Key person whole life and dependents term.
B
What specific kind of insurance is often written in conjunction with hospital expense policies and includes surgeons' and anesthesiologists' fees? A Practitioner's insurance B Basic surgical expense insurance C Basic medical insurance D Personnel insurance
B
Which of the following statements describes one of the reasons individuals purchase life insurance? A It provides income an insured cannot outlive. B It creates an immediate estate. C It helps liquidate an estate through death proceeds. D It always accumulates cash value.
B
An agent delivers a life policy. He explains a policy change was made and asks the applicant to sign a statement acknowledging the changes were explained. The agent says the premium has not been paid and must be paid before the policy goes into effect. He collects a Statement of Good Health, relinquishes the policy, and leaves. What did he do wrong? A He didn't need to collect a statement of good health. B Nothing C He left the policy with the insured without collecting the premium. D He should have created a new policy instead of changing the old one.
C
Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to A 30 days. B 90 days. C 6 months. D 9 months.
C
Which of the following best defines the Probationary Period in group health policies? A The stated amount of time when benefits may be reduced under certain conditions B The number of days that must expire after the onset of an illness before benefits will be earned C A specified period of time that a person joining a group has to wait before becoming eligible for coverage D The number of days the insured has to determine if he/she will accept the policy as received
C
Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in the application? A The insurer has already paid out the expected amount of benefits for the year. B The application contains a correction. C The application contains material misstatements. D The insured died too soon after applying for the policy.
C
What is the most common name for a single policy that is designed to insure two or more lives with a standard premium, and that pays the death benefit upon the first death? A Second-to-Die B Last Survivor C Survivorship Life D Joint Life
D
When filling out an application for insurance, the applicant makes a mistake. If a fresh application were not available, what could the applicant do to properly correct the mistake? A Either white out the answer or cross it out and write the new answer beside it. B Nothing. A fresh application must be obtained. C White out the incorrect answer and write the new one over it. D Cross the incorrect answer out, write the correct one beside it, and initial the answer.
D
All of the following are excluded from coverage in an individual health insurance policy EXCEPT A Mental illness. B Experimental procedures. C Purely cosmetic surgery. D Treatment received in a government hospital.
a
All of the following are features of a health insurance plan purchased on the health insurance marketplace EXCEPT A Dollar limits on essential benefits. B Guaranteed renewability. C Coverage for emergency services. D Coverage for pre-existing conditions.
a
Riley reads an agreement on the first page of her policy which includes a list of losses that will be covered by her insurer. What is the name of this agreement? A Insuring Clause B Coverage Provisions C Statement of Loss Coverage D Consideration Clause
a
When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used? A Paid-up additions B Reduce the premium C Fixed amount D Reduced paid up
a
Which of the following are characteristics of term life insurance? A Temporary protection, renewability, no cash value B Adjustable premiums and automatic increases in face amount at any given age C Coverage to age 100, cash value, and high premiums D Nonforfeiture provisions and living benefits
a
Which of the following is NOT true regarding a deferred annuity? A Income payments begin within 1 year from the date of purchase. B It is used to accumulate funds for retirement. C It can be purchased with a single lump sum. D The annuity grows tax deferred.
a
Which of the following is NOT true regarding a noncancellable policy? A Insurer can increase the premium above what is stated in the policy if claims experience is greater than expected. B Insurer cannot cancel the policy. C The guarantee to renew coverage usually only applies until the insured reaches age 65. D Insured has the unilateral right to renew the policy for the life of the contract, and may discontinue paying premiums to cancel it.
a
Which of the following statements is INCORRECT? A The insurer does not have the right to conduct an autopsy. B The physical exam and autopsy provision gives the insurer the right to examine the insured, at its own expense. C The physical exam and autopsy provision gives the insurer the right to examine the insured as often as may be reasonably necessary while a claim is pending. D The insurer also has the right to conduct an autopsy, if not forbidden by state law.
a
Which of the following statements is TRUE regarding an Agent's Report during the policy application process? A It is a required element of the contract. B It provides the agent's personal observations concerning the proposed insured. C It is only used when the initial premium is not paid with the application. D It becomes part of the entire contract after the policy is issued.
b The Agent's Report provides the agent's personal observations concerning the proposed insured. The Agent's Report does not become a part of the entire contract, although it is a part of the application process.
Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is cash value? A Application to Reduce Premium option B Automatic Premium Loan option C Mode of Premium option D Past Due Premium option
b With the automatic premium loan option, if the premium is not paid out and the policy reaches the end of the grace period, the insurance company is directed to borrow the premium from the cash value as a loan to prevent the lapse.
A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT A 20% of Part B coinsurance amounts for Medicare-approved services. B Part A coinsurance. C Part A deductible. D The first 3 pints of blood.
c
A dentist is off work for 4 months due to a disability. His dental assistant's salary would be covered by A Key Employee Disability. B Partnership Disability. C Business Overhead Insurance. D Disability Income.
c
A life insurance policy qualifies as a Modified Endowment Contract (MEC) if the amount of premium paid exceeds the amount that would have provided paid-up insurance in how many years? A 3 years B 5 years C 7 years D The life of the policy
c
A man is an attorney when he applies for a health policy. He decides to become a professional bungee jumper. He files a claim. What should happen? A The man's workers comp will pay the claim in full. B The insurance company will not pay the claim. C The insurance company will pay the claim according to the benefits available if the correct premium had been paid. D His coverage will be dropped.
c
A whole life policy is surrendered for a reduced paid-up policy. The cash value in the new policy will A Decrease over time. B Reduce to the pre-surrender value. C Continue to increase. D Remain the same.
c
All of the following are true of the Survivorship Life policy EXCEPT A The premium would be lower than in a joint life policy. B It can insure more than 2 lives. C The premium is based on the age of each insured. D The death benefit is not paid until the last death.
c
All of the following statements about indexed whole life insurance are correct EXCEPT A There is a guaranteed minimum interest rate. B The cash value depends on the performance of the equity index. C The policy face amount remains level throughout the life of the policy. D The premium is fixed.
c
An insured has an individual disability income policy with a 30-day elimination period. He becomes disabled on June 1st for 15 days. When will he collect on his disability income payments? A He will begin collect on the 15th day. B He will begin collecting on June 1st. C He won't collect anything. D He will collect 15 days of payment after 30 days.
c
Following a covered loss, the Time Payment of Claims Provision requires that an insurance company pay disability income benefits no less frequently than A Annually. B Weekly. C Monthly. D Semi-annually.
c
If a life insurance company uses HIV testing as a part of its underwriting, when must an applicant be notified of the procedure? A Prior to solicitation of the policy B Prior notice is not required C Prior to performance of the test D Prior to ordering a physical examination
c
An insured was diagnosed two years ago with kidney cancer. She was treated with surgeries and chemotherapy and is now in remission. She also has a 30-year smoking history. The insured is now healthy enough to work and has just started a full-time job. Which describes the health insurance that she will most likely receive? A She would be covered under her employer's group health insurance plan, but she would pay higher premiums than the other employees. B She would be denied coverage due to the risk posed by her prior medical history. C She would be accepted under an insurance policy, provided that a rider excluding cancer-related conditions is attached. D She would be covered under her employer's group health insurance plan, without higher premiums.
d
HMO members pay a small fee when they see their primary care physician. This fee is called a A Coinsurance B Deductible C Stop-loss D Copay
d
Life insurance creates an immediate estate. Which of the following best explains this statement? A The policy has cash values and nonforfeiture values. B The policy generates immediate cash value. C The death benefit will always be paid to the estate of the insured. D The face value of the policy is payable to the beneficiary upon the death of the insured.
d
Which of the following is NOT a standard exclusion in life insurance policies? A Hazardous occupation B War and military service C Aviation D Disability
d
Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance? A Risk analysis B The law of large numbers C Agent's Report D Insurance application
d
All of the following must sign an application for health insurance EXCEPT the A The proposed insured. B Applicant. C Producer. D Insurer.
d Health insurance applications require the signatures of the proposed insured, the policyowner (if different than the insured), and the agent or producer.
